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Asia Small Company

Matthews Asia Small Companies Fund

Portfolio Positioning
  • Seeks alpha in innovative, capital efficient entrepreneurial companies in Asia ex Japan
  • Focus on firms that have a strong competitive advantage through pricing power, distribution capability, and/or differentiated technologies and services
  • Bias toward businesses that cater to rising domestic consumer demand

30/04/2013

Inception Date

-14.62%

YTD Return (USD)

(as of 20/05/2022)

$20.03

Price (USD)

(as of 20/05/2022)

$82.74 million

Fund Assets

(as of 30/04/2022)

Objective

Seeks to achieve long term capital appreciation.

Strategy

The Fund seeks to achieve its investment objective by investing, directly or indirectly, at least 65% of its total net assets, in equities of small companies located in the Asia ex Japan Region, and may invest in other permitted assets on worldwide. The Fund defines Small Companies as companies with market capitalization no higher than the greater of US $5 billion or the market capitalization of the largest company included in the Fund's primary benchmark, the MSCI All Country Asia ex Japan Small Cap Index.

Risks

The value of an investment in the Fund can go down as well as up and possible loss of principal is a risk of investing. Investments in international, emerging and frontier market securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation, which may adversely affect the value of the Fund's assets. The Fund invests in holdings denominated in foreign currencies, and is exposed to the risk that the value of the foreign currency will increase or decrease. The Fund invests primarily in equity securities, which may result in increased volatility. The Fund invests in smaller companies, which are more volatile and less liquid than larger companies.

These and other risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 30/04/2013
Fund Assets $82.74 million (30/04/2022)
Base Currency USD
ISIN: LU0871674296 (USD) LU0871674379 (GBP) LU0871674023 (EUR)
Bloomberg Symbol MATASCI:LX (USD) MATASSI:LX (GBP) MAASCIE:LX (EUR)
Benchmark MSCI All Country Asia ex Japan Small Cap Index
Geographic Focus Asia Ex Japan: Consists of all countries and markets in Asia, excluding Japan but including all developed, emerging and frontier countries and markets in Asia
Fees & Expenses
Management Fee 1.00%
Total Expense Ratio As of 31/03/2022 1.15% ( USD ) 1.15% ( GBP ) 1.15% ( EUR )

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
    Returns
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As of 30/04/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Small Companies Fund (USD)
-4.64% -7.39% -15.09% -2.26% 16.96% 12.29% n.a. 7.96% 30/04/2013
MSCI All Country Asia ex Japan Small Cap Index (USD)
-4.56% -5.13% -11.10% -6.98% 10.67% 6.99% n.a. 4.85%
Matthews Asia Small Companies Fund (GBP)
-0.32% -0.98% -8.81% 8.27% 18.34% 12.96% n.a. 12.21% 30/04/2014
MSCI All Country Asia ex Japan Small Cap Index (GBP)
0.09% 1.38% -4.10% 2.58% 12.07% 7.63% n.a. 9.18%
Matthews Asia Small Companies Fund (EUR)
0.41% -2.00% -8.81% 12.01% n.a. n.a. n.a. 16.25% 30/12/2020
MSCI All Country Asia ex Japan Small Cap Index (EUR)
0.66% 0.81% -4.17% 6.15% n.a. n.a. n.a. 18.88%
As of 31/03/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Small Companies Fund (USD)
-2.06% -10.95% -10.95% 8.97% 19.54% 13.62% n.a. 8.61% 30/04/2013
MSCI All Country Asia ex Japan Small Cap Index (USD)
1.23% -6.86% -6.86% 3.07% 12.32% 8.23% n.a. 5.44%
Matthews Asia Small Companies Fund (GBP)
-0.04% -8.52% -8.52% 14.38% 19.44% 12.49% n.a. 12.39% 30/04/2014
MSCI All Country Asia ex Japan Small Cap Index (GBP)
3.16% -4.18% -4.18% 8.00% 11.93% 7.12% n.a. 9.27%
Matthews Asia Small Companies Fund (EUR)
-1.22% -9.18% -9.18% 15.14% n.a. n.a. n.a. 17.02% 30/12/2020
MSCI All Country Asia ex Japan Small Cap Index (EUR)
2.19% -4.80% -4.80% 8.87% n.a. n.a. n.a. 19.61%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014
Matthews Asia Small Companies Fund (USD)
22.19% 46.12% 17.53% -14.53% 30.80% -1.09% -11.08% 11.14%
MSCI All Country Asia ex Japan Small Cap Index (USD)
21.23% 26.60% 7.58% -18.63% 33.84% -2.05% -3.28% 2.56%
Matthews Asia Small Companies Fund (GBP)
23.80% 41.22% 14.03% -9.84% 19.38% 18.87% -6.49% n.a.
MSCI All Country Asia ex Japan Small Cap Index (GBP)
22.35% 22.69% 3.43% -13.57% 22.25% 16.83% 2.32% n.a.
Matthews Asia Small Companies Fund (EUR)
32.41% n.a. n.a. n.a. n.a. n.a. n.a. n.a.
MSCI All Country Asia ex Japan Small Cap Index (EUR)
30.44% n.a. n.a. n.a. n.a. n.a. n.a. n.a.
For the period ended 31/03/2022
Name 2022 2021 2020 2019 2018 Inception Date
Matthews Asia Small Companies Fund (USD)
8.97% 78.66% -12.26% -8.94% 21.76% 30/04/2013
MSCI All Country Asia ex Japan Small Cap Index (USD)
3.07% 87.24% -26.57% -11.29% 18.13%
Matthews Asia Small Companies Fund (GBP)
14.38% 60.25% -7.03% -2.12% 8.00% 30/04/2014
MSCI All Country Asia ex Japan Small Cap Index (GBP)
8.00% 68.28% -22.84% -4.50% 5.30%
Matthews Asia Small Companies Fund (EUR)
15.14% n.a. n.a. n.a. n.a. 30/12/2020
MSCI All Country Asia ex Japan Small Cap Index (EUR)
8.87% n.a. n.a. n.a. n.a.

Source: Brown Brothers Harriman (Luxembourg) S.C.A.

Since inception performance for share classes with less than one year of history represents actual performance, not annualised. In addition, for share classes less than a year old, Year to Date Return is calculated since inception. Where no past performance is shown there was insufficient data available in that year to provide performance.

Performance details provided are based on a NAV-to-NAV basis with any dividends reinvested, and are net of management fees and other expenses. Performance data has been calculated in the respective currencies stated above, including ongoing charges and excluding subscription fee and redemption fee you might have to pay.

All performance quoted represents past performance and is not indicative of future performance. Investors may not get back the full amount invested. Investors investing in funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal.

Additional performance, attribution, liquidity, value at risk (VaR), security classification and holdings information is available on request for certain time periods.

Portfolio Characteristics

(as of 30/04/2022)
Fund Benchmark
Number of Positions 71 1,536
Weighted Average Market Cap $4.0 billion $2.0 billion
Active Share 98.0 n.a.
P/E using FY1 estimates 17.7x 12.1x
P/E using FY2 estimates 14.0x 10.9x
Price/Cash Flow 13.2 6.7
Price/Book 2.7 1.4
Return On Equity 8.8 13.9
EPS Growth (3 Yr) -0.1% 4.6%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 30/04/2022)
7.69%
Alpha
0.83
Beta
89.84%
Upside Capture
67.96%
Downside Capture
0.81
Sharpe Ratio
0.57
Information Ratio
11.07%
Tracking Error
72.35

Fund Risk Metrics are reflective of Class I USD ACC shares.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 30/04/2022)
Name Sector Country % Net Assets
Bandhan Bank, Ltd. Financials India 7.1
Shriram City Union Finance, Ltd. Financials India 6.1
Ecopro BM Co., Ltd. Industrials South Korea 5.6
Phoenix Mills, Ltd. Real Estate India 4.4
Legend Biotech Corp. Health Care United States 4.3
Ginlong Technologies Co., Ltd. Industrials China/Hong Kong 4.0
Silergy Corp. Information Technology China/Hong Kong 3.9
Lemon Tree Hotels, Ltd. Consumer Discretionary India 3.6
Airtac International Group Industrials China/Hong Kong 2.4
Solus Advanced Materials Co., Ltd. Information Technology South Korea 2.3
TOTAL 43.7

Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.
Source: Brown Brothers Harriman (Luxembourg) S.C.A

Portfolio Breakdown (%)

(as of 30/04/2022)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure

Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.

Not all countries are included in the benchmark index(es).

The Portfolio’s market cap exposure breakdown presented is used for comparison purposes and the definition of the capitalization breakdown is from MSCI.

The Fund defines Small Companies as companies with market capitalization no higher than the greater of US$5 billion or the market capitalization of the largest company included in the Fund's primary benchmark, the MSCI All Country Asia ex Japan Small Cap Index.

Source: FactSet Research Systems unless otherwise noted.
Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Ratings

  • OVERALL
  • 3 YEAR
  • 5 YEAR
(as of 24/01/2022)

Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.

Overall Morningstar RatingTM is reflective of the noted share class. Fund ratings represent an opinion only and are not a recommendation to buy or sell any fund. Copyright ©2021 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is provided for reference purposes only.

The Overall Morningstar®️ Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.

Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Portfolio Managers

Vivek  Tanneeru photo
Vivek Tanneeru

Lead Manager

Jeremy  Sutch, CFA photo
Jeremy Sutch, CFA

Co-Manager

Commentary

Period ended 31 March 2022

For the first quarter of the year, the Fund returned -10.95%, while its benchmark, the MSCI Emerging Markets Small Cap Index, returned -6.86% over the same period.

Market Environment:

The first quarter brought sharp changes to the Asia small-cap landscape. The notion that inflation is more embedded than transitory gained traction while Russia’s invasion of Ukraine led to a rapid reassessment of geopolitical, energy and defense priorities globally. The market sentiment this created didn’t support growth stocks and energy and commodity prices rallied on concerns over supply disruptions. Weakness in Chinese equities also continued, fueled by the ongoing delisting threat to Chinese ADRs, economic cost of China’s zero-COVID policy and concerns over China’s stance over the Ukraine invasion. 

Energy was the best performing sector among Asia-small cap equity indexes while health care and consumer discretionary were the worst performers. As a large energy importer, many of the markets of Asia, including South Korea and Taiwan, were negatively impacted by rising oil and gas prices. The better performers were in Southeast Asia, including Indonesia, Thailand and Singapore.

Asian currencies mostly held their own against the U.S. dollar. The Thai baht and the Chinese renminbi were the best performers, while the worst performers were from energy importers and included the Japanese yen, the Taiwanese dollar, the Indian rupee and the Korean won.

Performance Contributors and Detractors:

From a country perspective, the portfolio’s overweight allocation and stock selection within India contributed the most to the Fund’s relative performance during the quarter, followed by Indonesia. On the other hand, the portfolio’s overweight allocation and stock selection within China/Hong Kong detracted the most from the Fund’s absolute and relative performance.

At the sector level, stock selection within consumer discretionary, overweight in financials and underweight in communication services added to performance. Consumer discretionary stocks contributed most to performance during the quarter as economic activity in general and consumer services spending in areas such as travel, in-person shopping and hotels, in particular, rebounded strongly in Asia and elsewhere. On the other hand, stock selection within information technology, industrials and health care detracted most from performance. In light of market’s fast-evolving rate expectations and the energy and commodity price spikes during the quarter, the rotation away from expensive growth stocks continued apace. This has particularly negatively impacted high growth sectors such as technology and biotech, which had done well last year.

Among individual holdings, positive contributors included Bandhan Bank, India’s largest microfinance lender. After several quarters of turbulence on the back of COVID lockdowns and general weakness in India’s rural economy, Bandhan’s operations have seemingly stabilized and problem assets mostly provided for, giving a positive background for Bandhan’s stock price. On the other hand, the portfolio’s health-care holdings in China, including Peijia Medical, Medlive Technology and Innovent Biologics, were among the biggest detractors. Innovent Biologics was impacted by potential changes in clinical trial design requirements for the U.S Food and Drug Administration (FDA).

Notable Portfolio Changes:

During the quarter, the fund initiated new positions in holdings including Security Bank, DGB Financial Group and BNK Financial Group. We also added to existing positions, including Bandhan Bank. As the Indian economy bounces back to normalcy, we expect Bandhan’s formidable rural franchise to deliver strong growth and profitability in the coming quarters and years.

In the quarter, our exits included small stub positions held in Indian Railway Catering & Tourism and Wilcon Depot from which we took profits.

Outlook:

Fed moves to raise interest rates and shrink its asset portfolio, together with market expectations for the Fed’s monetary tightening plan, remain the most important variables to watch given their near-term implications for regional, sector and style performance. From a portfolio standpoint, we will look to maintain a balance between growth and value exposure while staying broadly diversified across sectors and countries. We remain watchful about the impact of inflation on corporate earnings, which we expect to moderate in 2022.

Across Asia emerging markets we believe there is sufficient liquidity. While we have not seen much uptake in credit, any pickup in credit issuance should further support economic growth. In many parts of Asia, COVID-19 vaccination is progressing well and provides hope for economic activity normalization in the coming quarters but China’s zero-COVID policy needs watching. Barring another serious pandemic wave, we believe small companies are poised for attractive growth at attractive valuations.



Rolling 12 Month Returns For the period ended 31/03/2022 - I (Acc)
Name 2022 2021 2020 2019 2018 Inception Date
Matthews Asia Small Companies Fund (USD)
8.97% 78.66% -12.26% -8.94% 21.76% 30/04/2013
MSCI All Country Asia ex Japan Small Cap Index (USD)
3.07% 87.24% -26.57% -11.29% 18.13%
Matthews Asia Small Companies Fund (GBP)
14.38% 60.25% -7.03% -2.12% 8.00% 30/04/2014
MSCI All Country Asia ex Japan Small Cap Index (GBP)
8.00% 68.28% -22.84% -4.50% 5.30%
Matthews Asia Small Companies Fund (EUR)
15.14% N.A. N.A. N.A. N.A. 30/12/2020
MSCI All Country Asia ex Japan Small Cap Index (EUR)
8.87% N.A. N.A. N.A. N.A.

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg

 

Performance figures discussed in the Fund Manager Commentary above reflect that of the Institutional Accumulation Class Shares and has been calculated in USD. Performance details provided for the Fund are based on a NAV-to-NAV basis, with any dividends reinvested, and are net of management fees and other expenses. Past performance information is not indicative of future performance. Investors may not get back the full amount invested.

The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.

Information contained herein is sourced from Matthews Asia unless otherwise stated. The views and opinions in this commentary were as of the report date, subject to change and may not reflect the writer’s current views. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund’s future investment intent. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned herein. The information does not constitute a recommendation to buy or sell any securities mentioned.

Investors should not invest in the Fund solely based on the information in this material alone. Please refer to the Prospectus for further details of the risk factors. 

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